5. During an inflationary period, the Federal Reserve would probably: a. Raise t

Question

5. During an inflationary period, the Federal Reserve would probably: a. Raise the discount rate b. Sell government securities c. Lower the reserve requirements d. Print more Federal Reserve Notes e. Both a and b f. Both b and c 6. To eliminate a recessionary gap, monetary economists would advise the Fed to: a. Raise the Federal Funds Rate b. Increase the Reserve Ratio c. Buy government securities through open market operations d. Raise the tariff on Chinese imports e. Raise income taxes on the wealthy f. None of the above

Explanation / Answer

Question 5

During inflationary period, Federal Reserve administer contractionary monetary policy to eliminate or control inflation.

Contractionary monetary policy includes following actions of Federal Reserve -

1. It raises the reserve requirement.

2. It raises the discount rate.

3. It sells government securities.

So, during an inflationary period, the Federal Reserve would probably raise the discount rate and sell government securities.

Hence, the correct answer is the option (e).

Related Questions

Navigate

• Browse (All)
• Browse 5
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.